The electric car finally seems to be on the verge of breaking through, offering significant environmental benefits, especially in urban areas. Innovative business models are on the way which should boost consumer acceptance and overcome the remaining barriers, such as high battery costs, green electricity supply and charging infrastructure.

Given the role that transport plays in causing greenhouse gas emissions, any serious action on climate change will zoom in on the transport sector.

Yvo de Boer, Executive Secretary of the UNFCCC, Tokyo, January 2009

Several European countries as well as the US, Japan, China and others, have recently announced bold plans for the introduction of electric vehicles. These include fiscal incentives, funding research on batteries and electric vehicles and plans for the deployment of a charging infrastructure. Major cities such as London and Paris have announced electric car-sharing systems, while public administrations and companies using large captive fleets are purchasing electric vehicles.

At the same time, utilities, car manufacturers, battery producers and academics are joining forces on initiatives such as the EURELECTRIC Task Force on Electric Vehicles and EpoSS, the European Technology Platform on Smart Systems Integration. Together with the European Investment Bank the European Commission has launched the European Green Cars Initiative, with EUR 5 billion partly dedicated to the research, development and manufacturing of batteries and electric cars and to demonstration projects.

This flurry of activity seems to indicate that the electric car is heading for a major breakthrough at last - but is it here to stay this time? History calls for caution. The production of electric vehicles began as far back as 1838 – 52 years before combustion engine vehicles. However, after 1913 the mass commercialisation of the combustion engine led to a rapid decline in electric vehicles. Attempts to reintroduce electric vehicles in past decades have for the most part been unsuccessful and they still represent a very small, niche market.

Yet today the future looks brighter. A great deal of progress has been made in battery technology and electric vehicles are expected to re-enter the market on a large scale within the next couple of years. Based on a moderate growth scenario, by 2050, electric vehicles could represent more than 60 % of new sales and constitute up to 25 % of the global car fleet. However, estimates of the extent of future deployment vary greatly, as there is still some uncertainty in relation to the development of technology and future consumer behaviour.

Electric cars: the silver environmental bullet?

Electric vehicles have zero tailpipe emissions, but there are, of course, emissions involved in the production of electricity. One major benefit of electric vehicles is the "displacement" of harmful air pollutants from urban to rural areas, where population exposure is lower. Noise levels are also lower, particularly in urban driving conditions.

Another major advantage of electric vehicles is their energy efficiency. With a tank-to-wheel efficiency in the range of 60 to 80 %, they outperform conventional cars four-fold. Generally, electric vehicles show greatest energy savings at low speeds and in situations involving frequently-changing driving dynamics, which is another reason why cities are a prime target market.

Thanks to their energy efficiency, and assuming that electricity generation will be even greener in the future, electric vehicles could contribute to a considerable reduction in greenhouse gases. Given the ongoing debate on climate change, this could prove to be an important factor. Indeed, transport is responsible for more than a fifth of the EU's greenhouse gas emissions and it is the only sector with growing emissions. While the improvement of internal combustion engines still offers considerable potential for reducing emissions per kilometre driven, reductions in greenhouse gas emissions over and above 50 % will require new technological solutions, such as the electric vehicle.

Compared to conventional vehicles, and based on the current average European electricity supply, electric vehicles have 50 % less emissions. Further benefits can be achieved if the carbon intensity of power generation continues to decrease with further greener and renewable energy sources.

There are, however, still some obstacles related to green electricity supply, the as yet expensive battery technology, the limited driving range and the need for a dense network of electric charging facilities. To overcome these obstacles, innovative business models are being developed to help transform automotive transport.

Integrated transport and energy concepts

To be a success, the electric car has to be introduced onto the market as part of an overall transport and energy concept rather than stand-alone technology. If millions of vehicles are to be connected to electricity grids without a negative impact on the environment, there must be an integrated approach to power supply and demand (from electric vehicles), to ensure the use of green electricity sources. Otherwise, the anticipated increase in peak load demand would require new investments in electricity generation and grid capacity.

Scientists and engineers from the automobile industry and electricity supply companies are already working on 'smart electricity grids' for the vehicle-to-grid connection interface. This will enable electric vehicles to become an inherent part of the electricity supply and distribution system. Electric cars would not only run on green electricity, but could also be used to store and supply electricity back to the grid when needed. In this way, electric transport would also boost the further development of green electricity.

Battery leasing and smart electricity grids

Today's battery costs have a price premium of EUR 15,000 to 40,000. As technological progress is made and economies of scale begin to kick in, this could decrease to under EUR 10,000 in the mid-term and EUR 5,000 in the longer-term. To compensate for these higher costs, some countries and cities have announced important incentives, such as tax rebates and subsidies, free parking in urban areas and exemption from congestion charges and road taxes.

Another promising way of limiting battery costs is the battery leasing formula, whereby the electricity company owns the batteries and leases them to car owners. The Norwegian THINK City electric vehicle initiative already offers such a battery-leasing concept. The vehicle manufacturer retains the ownership of the batteries, which also guarantees the supply of the most advanced battery technology and replacement in the event of deteriorating performance.

Currently, the driving range of electric vehicles is limited to around 200 kilometres. A dense charging infrastructure is needed in public spaces to permit frequent recharging during idle hours. There is also the time element to consider; recharging a battery can take from 3 to 8 hours, assuming a conventional plug-in to the electric grid. Given that vehicles are parked an average of 95 % of the time, this should not pose a problem if charging points are widely available.

In addition, innovative charging solutions are in the pipeline. High-power, fast charging stations could reduce the charging time to less than 30 minutes. Smart grid systems for the vehicle-to-grid connection interface could allow an optimisation of battery charging. This, in turn, could become attractive to utility companies with regard to the management of the electric grid and the fluctuating supply and demand of energy.

An important frontrunner in this regard is 'Better Place', a US start-up company that plans to build a dense network of battery charging and exchange stations for electric vehicles. Together with a Renault-Nissan alliance, Better Place has been developing prototype electric vehicles on which battery exchange takes only a few minutes. A leasing scheme will provide both the battery system and the energy supply. The subscription model, similar to that for mobile phones, would charge drivers of electric vehicles according to the distance travelled. The first charging networks are due to begin operating in 2010/11 in Denmark, Israel and Portugal. Similar projects are planned in other countries, including the US (California and Hawaii), Canada (Ontario) and Australia.

Getting the buy-in from consumers

For the electric car to achieve a large-scale breakthrough, technology and smart transport - energy systems alone will not suffice. Electric vehicles will only have a positive impact on the environment if they replace a significant amount of the mileage driven in conventional cars. A fundamental change in purchasing and mobility behaviour is therefore crucial. This is where lifestyle choices and mobility planning come in.

In Europe, more than 80 % of car journeys average below 20 km and Europeans drive less than 40 km per day. This means that most of our trips can be perfectly accommodated by a mid-size electric car. Yet people still tend to buy cars that greatly exceed their daily requirements, preferring to buy large cars that can also cover the occasional long distance holiday, for example.

To change this consumer behaviour, alternatives must be made available. For instance, electric vehicles could be used for short distances and daily trips, while a supplementary conventional or hybrid vehicle (rented or owned) could be used for the occasional longer journey. Recent research also shows that people are likely to become more open to flexible access to transport as time goes on and by 2020 they should be less dependent on their own car. Electric car-sharing services could further foster this development, and are already being piloted in cities such as Paris (Autolib) and Oslo (Move About).

Finally, electric transport also needs to be tied into an overall mobility concept that provides new links between different means of transport. A combination of electric car-sharing with mass transit services (e.g. train) would extend the network coverage of public transport providers far beyond their traditional nodes.

Policy-makers, researchers, car manufacturers and utilities will have to ensure that smart technology and new business models are available to ensure that electric mobility can deliver its potential environmental benefits to the full. Informed and supportive consumers are needed to make this happen.